HOA Dues are OUT OF CONTROL | Santa Clara County High's and Low's

 




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Introduction to HOA Dues
HOA dues are out of control. I have been a huge talker about why HOAs haven't kept up with the value of what they're charging. And it's mostly because of insurance costs. I get it. Insurance is super expensive right now. There are a lot of runaway things, but a lot of HOAs don't manage their revenues or reserves correctly.

And there's a lady who will actually audit an HOA for you. Before you buy a condo, it costs a couple, three, or 400 bucks, but I'd rather you walk away from a deal knowing that this HOA is a toxic asset versus something that's a really good value. 

Factors Driving Up HOA Costs

So what's going on? Why is it so expensive? Insurance, reserves, cost of labor, things have to be maintained.

And greed. And I have to say that across the country is the same problem. 

Regional HOA Fee Comparisons

Now, this is monthly condo HOA fees over a rolling three-month period. Now, Miami is obviously one of the most expensive, but that's because they went through the whole hurricane issue. And now their things are being done.

And a lot of places, a lot of condo apartments need to be retrofitted because there was that one condo that fell down. Killed some people and now there's a huge law going into effect to make sure that those residents are protected.

Association fees in Oakland and San Jose Metro areas were lower than in San Francisco Metro by about 540 to 560. But increased at slightly faster rates over the past year, condo association fees, which can range from a few hundred dollars to more than a thousand dollars a month are on the rise largely due to the insurance crisis.

California's Insurance Crisis Impact

The California home insurance crisis, going back to this is a solo cry from the industry, from the owners of homes all over California. Somebody has to do something about this insurance issue. I don't know what it is. I think California has to put a heavy foot down and smack them around a little bit.

I understand the plate of the insurance companies. They're there to make money and when they lose money, it sucks for them and the stakeholders and stockholders, but there's gotta be a happy medium somewhere, and a fair plan is not the right answer because it's way more expensive. Generally costs of services.

So assessment fees need to rise. And when an HOA management company takes on an HOA, a condo association, or a townhouse association, they look at it, their fee per door. So it's, it used to be nominal. Now it's pretty crazy expensive, but they're in the business to make money too. So there's a lot of overlapping issues that are coming down.

I think the HOA industry needs to be heavily regulated. Looked at not as a tax, but as a lift of burden for those residents to not have to maintain the outside of their house or the lawn or the streets or the sewer or the water, and depending on how that HO, the condo association set up, you might have to pay into it.

HOA Fees as a Hidden Tax

And there are other things that you don't know about that are leaks lurking underneath assessments and the way I see it is HOAs are more like a tax, an added tax because you're already paying a lot to live here. You're living a lot to buy a house or a condo. You're living a lot. You're paying more for gas.

You're paying more for insurance. You're paying more for everything. And if you move into a condo association, you're. You're you have to pay those that HOA do and that's an added tax no matter how you look at it San Jose's average is 557 And it went up last year from the year before 9 percent Oakland, the same thing, 536.

That's a huge tax. Now look, let's just take this one example. 
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Case Study: Real Estate Listings
And, it was one of my listings. I just popped this in here. I looked at this one right here, which I sold this unit right here, a couple of years back. It's not for sale yet. It's two bedrooms, one bath, measly 910 square feet. You get one carport.

You don't get enough. You don't get a garage. You get a carport, right? You get a pool. That's great. But that adds to insurance and look, we're, Stonegate villas, 374 a month. Now, I would say that's a better-managed HOA, however, 374 adds a lot to your monthly net your monthly payment. If you bought this and put 20 percent down, which is 100, 000, your loan is 400, 000 and you're looking at a total of 3, 400 PITI.

That's at 6 percent interest. And on Thursdays, we look at the interest rates and they're at 7. 5%. So you would have to buy it down considerably, which means you're going to add points. So you could probably add, I don't know, what is it for 8, 000 for two points, just rough numbers and drop that down to 6%.

And now you're putting in 113, 000 down payment. For all your closing costs, and then you're looking at 3, 400. If you go interested only at the same rate, you're looking at 3, 000, but that's still 400 extra a month that you have to pay for the privilege of having a two-bedroom, one-bath, 900-square-foot house.

So you see, when I look at it, I look at it as a tax. I don't know if anything's going to happen, I think across the board, across the nation, something has to happen where we regulate this. There's probably already an association of some sort like the Real Estate National Association of Realtors, but that's not really for the consumers for the client, which is the HOA companies.

So I think there's gotta be something out there that happens and changes. And from what I remember, there wasn't even a. The laundry room, when I sold it and I had open houses, people were asking where the laundry room was down there. You have to do your laundry. Should I think the laundry was right here down there or go to a laundromat?

So you get the privilege of going to a laundromat too. 




Home Inspection Tips
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If those machines are broken, which happens all the time, home inspection checklist for selling your house, get your home inspection checklist downloaded. Now get it started and get those handymen working on it. Everything that's wrong with your house.

No house is ever perfect guys. Tell you that right now I can tell you that my floors are not level. My walls are not square nor are they plumb or are they straight? I could show you different places in this house That's 56 years old and I can tell you that there is nothing perfect about this house.

It's a great house. There's stuff wrong with it, but there's, it's great, but no house is ever going to be perfect. So when you put it up for sale, make sure you get it close to perfect, close to as good as possible. 



Featured Property: Los Gatos House
Los Gatos House of the Week, Hernandez Avenue, not my listing, three bedrooms, one bath.

Here we go again, 2, 300 square feet for a mere 4, 000, 000. Cause you get the privilege of being able to walk to Los Gatos downtown. It's awesome. Take a quick look at some of these pictures. Swear those are box brownies.

Oh, is it attached? It's detached, but the garage, it's a four-car garage.

I don't see it. Garage, two. Parking space, two. Detached garage. Visitor parking. Why do you have four? Maybe it's a zero-lot line.

Oh, that's a formal dining. It looks craftsman. What does the front look like? Yeah, it's kind of craftsman. It's nice. I like the woodwork. The problem is that they went white and the craftsman tradition is supposed to be the wood color. So you should Tear off all that not tear off all the paint and go natural wood.

It looks like it's a basement.

A lot of pictures nice Yeah See, there's a basement washer and dryer set up you get to it from looks like here the mudroom And then you have your foyer and you have a family room and formal dining and three That's tiny two bedrooms and it's a detached garage. There you go and a shed. 


Property Price Reductions
Okay, ridgefarm is not my listing This is what are these price reductions?

This is reduced. Let's take a look. The original list price was 1.35 and it went up to 3 or so. Maybe it went up to 1. 5. I don't know. I have no idea. I can't tell with this one. Let's take a look at this. This is in Blossom Valley, 95123. Everything's white, crisp, and clear with gray laminate flooring, looks like.

I just sold a house with laminate flooring and I can tell you I'm not a fan. Yeah. Nice looking kitchen. Everything looks like this was a flip.

You can tell because it's got the white and black trim and highs and lows. 


Market Overview and Conclusion
So 40 days on the market report, 77 homes over. I didn't do that. So all this is the same. We have 353 homes for sale and in Santa Clara County, we have 777. There you go. All right. That's it for now. I'm Vito with Abitano. We'll see you out there.


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Vito Scarnecchia

Real Estate Broker, Veteran, Dad

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